After his career in the military forces of Myanmar, he was ordered back to Rangoon in 1984 after an attack on a visiting South Korean delegation which was visiting Burma at that time. Quite a few South Korean cabinet Ministers died during the attack, which occurred on October 8, 1983 and was perpetrated by terrorists sent from North Korea. Khin Nyunt was then appointed Chief of Intelligence. From the mid-1980s to the late 1990s Khin Nyunt was considered to be a protégé of the late Ne Win, who supposedly retired from politics in July 1988 but who is thought to have continued to be an influential figure behind the scenes until about the late 1990s.

The 1988 uprising that occurred throughout Burma from March to September 1988 was quelled by the military when the State Law and Order Restoration Council (SLORC) was formed on 18 September1988. The SLORC was later renamed as the State Peace and Development Council (SPDC), and Khin Nyunt was appointed as its first secretary (Secretary -1), a post which he held until his appointment as Prime Minister in August 2003. The post of 'Secretary-1' is now (early September 2006)held by Brigadier Thein Sein.

Shortly after Khin Nyunt was appointed as Prime Minister, he announced a seven-point roadmap for the restoration of democracy; this roadmap was heavily criticized by the Burmese opposition as well as by many foreign governments especially Western ones as it envisaged a permanent military participation in the government. The so-called 'systematic and step-by-step implementation of the road-map to democracy' also contains no time-line.

The first 'step' of the road map was the recalling of the suspended National Convention (NC) which first met in January 1993. The NC was supposed to 'lay down' the basic principles for a new Constitution. The NC has been suspended since 30 March1996. The NC was convened for the first time in more than eight years on May 172004 and was suspended a few weeks later. It again was convened in February 2005 and December 2005 for a few weeks and these sessions were again suspended.

After his appointment as Prime Minister, Khin Nyunt's role in the Government gave rise to some hope and speculation that there might be some 'liberalization', as he is considered a moderate pragmatic who saw the need of a dialogue with the democratic opposition. The SPDC Chairman Than Shwe and his deputy, General Maung Aye are hardliners who opposed any relaxation of the military's iron grip of the country.

On 18 October2004, in a one-sentence announcement signed by SPDC Chairman Senior General Than Shwe, Khin Nyunt was "permitted to retire on health grounds". In fact at the same time he was "permitted to retire", he was immediately arrested ("put under protective custody"). Allegations of Khin Nyunt's corruption were officially made several days later. Khin Nyunt's dismissal and arrest were the result of a power struggle in which the junta's strongman Than Shwe successfully managed to clip the power of the "intelligence faction" of the Burmese Armed Forces which Khin Nyunt led. Most of the Generals and military officers in the SPDC, like Than Shwe, did not and do not want to negotiate with Aung San Suu Kyi and the National League for Democracy (NLD).

On July 5, 2005, Khin Nyunt was tried by a Special Tribunal inside Insein prison near Rangoon on various corruption charges. On July 21, 2005, he was sentenced to 44 years in prison, though it is believed that he is ostensibly serving his sentence under house arrest instead of in prison. Khin Nyunt's sons were also sentenced to 51 and 68 years respectively. It is unclear whether his wife was also indicted.